issues and export countries maybe like japan, let's watch what they do with their currency to try to combat that effect. it's really fascinating and a little scary. >> yep, it's got a lot of people's attention. rick, we'll see you tomorrow. that does it for us here on "squawk on the street." let's get back to hq and the "fast money halftime." and carl, thanks very much. welcome to the halftime report. four hours till the close today. here's where we stand. there's a lot of red on the board today. you can see the dow jones industrial average almost at the lows of the day. down 77 points, four straight days now, our traders are all over the pullback today. and here's what we're following on halftime besides the market. apple is the momentum cook. you get it? the stock's been falling, criticism mounting, is the man at the top to blame? battle o of retail heavy weights, will apple's plan put amazon down for the count? was first, our top story, and

that's the market's moment of truth. the first earnings reports are in, not as bad as feared. the outlook, they're not great. what does it mean for the stock market? and can the rally resume. let's bring in joe terranova, pete najarian and stephanie link for answers. how about it, pete, can the rally resume? >> well, i'm sure it can. we're getting to the start of this whole earnings season, but obviously, very dependent on what we're going to get from friday. and i think i'm point in timing toward those financials. that's where i'm looking because i'd love to find out what the financials, how they've been able to manage themselves through this whole housing mess and are they able to make the kind of money that many of us think. and are they undervalued or actually fair valued? i think we'll get a lot of those answers on friday. >> joe t, rally over? >> a lot of it has to do with apple. pete brings up a good point. i think insurance companies are going to do really well. i think real estate's going to

do really well. look at the results we got last night, starbucks is beginning to build a position long there again. i like the consumer discretionary names. that being said, the market is on the brink of challenging a critical support level . everyone's going to seek some protection there. i know you guys don't like the old s&p futures, many s&ps we talk about, but that's my way of getting protection. that's what we did today. sold some. >> yum, alcoa, costco, better than expected, the outlook, though, something to worry about. >> well, i think expectations have come down and guidance has come down. but it's going to be a market. and the perfect example today, alcoa issuing questionable guidance and more of a down beat guidance, but you had yum really executing and outdelivering. i actually think if you look at where estimates have come down, materials, industrials, staples and discretionary, i think those are interesting groups and if

they are weak, you buy. i don't think that cummings news, by the way, was any new news. we've seen the data markets decline since january pretty steadily. and the fact it's not down more i think is very telling. >> where do you come down on the market? >> i think it's over. i think institutions, large institutions have been starting to distribute stocks over the last two months, the central bank liquidity really gave a boost to stocks, but the earnings picture doesn't look very good. earnings year-over-year are going to be down for the first quarter in a long time. and in reality, earnings growth next year when we have the fiscal cliff coming up in a few months might not look so appealing either. so i think growth versus valuation is a bit skewed. >> what, however, if they just continue the kick down the road of the fiscal cliff and all the rest of it. we keep pushing things further out. would that change your thesis? would you become more bullish in front of that kind of news? >> well, certainly, if they

kicked everything down the road, that's a benefit to gdp growth. but in reality, even if you extend the bush tax cuts and they aren't as onerous on the sequestration for the spending cuts, the payroll tax cut and the health care reform law are still going to impact gdp growth by 1.5% next year. there's a significant amount of fiscal cliff even with a good kick the can down the road agreement. >> and it says the rally's over. >> and i'm not ready to say it's over and i kind of would push back. and the one thing i think we want to hear over the next couple of weeks which i think would change your mind is going to be capital allocation strategies. i mentioned starbucks before, they're going to increase the dividend, going to see that bump up to 85 cents. there'll be a lot of companies that execute on that strategy and i think then that's got to motivate you to stay in the rally longer. >> i do think dividend payers are still a good cash flow generating dividend payers are still potentially a good area to

hide out. like joss, i do think you might see some people initiating special dividends. >> there's a lot of cash on the sidelines at this point and a lot of portfolio managers have underperformed their benchmarks year-to-date. and i think that is going to force money into the market if you see big pullbacks. people are dying to buy high-quality companies on sale. our next guest isn't afraid to take a position at all, one of the most bullish outlooks on wall street. will he be right? or is he just missing the boat? let's welcome in tony dwyer. welcome back to "halftime." >> great to be here. >> you still think we're getting to 1,575 on the s&p 500? >> i do. and sounds like an insane idea, but i was -- >> you said it, not me. >> on june 26th, the market ease up 11% from there. we forget when the average up year for the dow jones industrial average is over 18%, the average up year for the s&p 500 is 16.8%.

it's not that crazy. just crazy relative to the way it feels. and fortunately, feelings aren't fact. i think we're in the fundamental sweet spot and we've been calling for a correction down to 1,400 but at the end of the day, we're in this economic sweet spot. everybody keeps clambering for this great economic data. when we have great economic data, it comes with tighter monetary policy, comes with tightening credit standards, comes at the end of an economic cycle. we're at the point where we're still coming off this his or h low and trending better. >> let's deal with the fact, earnings slowing, china's slowing, fiscal uncertainty, i could find others. >> you know, and they're all there, and like i said last time we were on, i could make a hell of a negative case using those things, but they were all absolutely true in second quarter earnings, yet here we are at the peak we're up 15%. so, again, the market correlates to the direction of earnings, the direction of earnings is driven by economic activity. driven by the availability of

money, that's driven by the fed policy and that's driven by inflation. and all of those are historically in favor of equities, so when we get these pullbacks, until you have money availability begin to shrink and even begin to tighten, it's still getting better, you want to be buying those kind of weak periods. >> joe terranova, you first. >> they see at the end of 2013, they see the end of this year 1,250, how completely ludicrous is that we would see such a significant drop from where we are now at 1,430? >> again, you know, in high-frequency world. and i missed a good chunk of the decline last year, but, again, our conviction level goes very high. and it's high because all of these -- if you look at credit standards out yesterday -- >> but tony, i know your conviction level for the upside is incredibly strong.

really what i'm asking you, is, in fact, goldman sachs a 1,250 year-end target ridiculous? >> yeah, i don't think it's right. i don't want to call it ridiculous because thad be a very arrogant and the market's humbled me enough to know i can be wrong. but you only get those kind of constraints when you either have a systemic failure risk being wedged into the market or a credit risk. and i think a lot of people are focusing the bear case on the fiscal cliff. and, again, that's one of those things you can't prove or disprove and that's why i don't talk about it as much as the improving trend in the fundamental economic data. >> stephanie link? >> well, tony, what about earnings? you talked about the market follows earnings and revisions have been coming down. and a lot of people are very nervous that not only next year do earnings come down, but multiples get compressed, revenues get compressed. where do you see upside relative to that scenario? >> the biggest pushback, i've been on the road for a month and talked to so many of the

institutional accounts. the biggest pushback i get in both cases is that margins are at peak and likely to reverse. the problem is, companies, you don't walk into a ceo of cfo's office and hear them say our revenues are going to go up 3%. i think we'll raise our cost 8%. doesn't happen. where margins compress and you get declines, not rate of changes, but declines is when companies can't cut costs fast enough as revenues drop in a recession. i just don't see that, stephanie, over the course of the next really two to three years. you can have a temporary margin compression, but as long as the economy is growing, which it is, slow but consistent, you're going to get even if margins stay the same, you'll get top line growth. >> tony, let's talk sectors real quick. aren't you worried about cummings, the global exposure of some of those names, you like technology, apple, intel,

hewlett-packard, financials, aren't you worried about the low interest rate environment and the head winds that exist for those? >> that's funny. that's just fast money. i'd be all in or all out -- >> those aren't daily problems, though. >> here's what i do, i remove my opinion from it because who cares? what you want to look at what the historical precedent is when you get a sharp drop in interest rates, followed by a pivot back up, which is what we've had at the end of july. when that's happened in the past and i use the ten-week rate of change on the ten-year note yield. six months out every time information technology and consumer discretionary has outperformed. financials have outperformed all but once, and the industrials all but once, as well. so, again, you want to look at what performs with interest rates? and i think that goes to stephanie's point too. what could kill earnings next year? well, that's if we have further deterioration in international economic activity and all the global money printing doesn't work. now, let's get by whether that's

right or wrong ten years from now. the fed is telling you to buy risk. the guys pretty printing the money are telling you they're going to do it until it works and so far i believe them. again, doesn't lead to a robust growth rate, but it's consistent growth, which is what, again, the sweet spot for equities once the pullback's done. >> it's a provocative, some would say controversial call in the market not even saying 1,650 is your target for 2013. thanks as always for being a straight shooter and we'll see you next time. >> thanks a lot. two big name retailers seeing action today. brian shactman with your market flash. >> hey, walmart and costco. solid earnings, hit an all-time high, last tick it was 104.43, slightly below that, bottom line, membership fees are up and that is money in the bank. the more dynamic story might be walmart. they have the analyst meeting and they are test marketing same-day delivery as well as accelerating small-store openings in the u.s. they also hit an all-time high. they're going after amazon,

folks, and as one analyst pointed out, they have 4,000 distribution points in this country and they are going to leverage that. and we'll see what happens. back to you. >> yes, we will, brian, in fact, we're going to discuss that in depth with traders coming up. we're going to talk about that very issue. the battle of the retail heavy weights, walmart versus amazon. how to play the new chapter in that war. and shares fall about 5% in one week, hit correction territory yesterday. should we blame his management style? what is to blame? some answers when we come back.

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at the guaranteed's lowest price.attresses plus, pay no interest for 3 years on the best brand-name mattress sets. get your best rest ever from sleep train. ♪ your ticket to a better night's sleep ♪ welcome back. move over google and apple, another big battle being waged o on the street, in a direct attack on amazon, walmart will now offer same-day delivery for products purchased online.

so, pete, legitimate challenge or what? do they have reason to be worried? >> no, absolutely not. it's going to be a cost and logistical nightmare for walmart. i realize they've got the 4,000 distribution areas, that's what everybody's talking about, but this is about cost. this is a company, walmart, they already operate on absolutely razor thin margins, right? >> yeah. >> now they're going to cut into those margins by trying to do same day and charge people a flat rate of $10. i don't see how this works at all. >> another man versus machine, right? >> it is. right. >> you have to have people fill the orders, machine, more automated in the warehouses for amazon. >> how about when those orders don't go so well? this is -- i don't believe in this. ebay tried this, everybody had this whole same-day delivery process. i think it's a lot of cost, a lot of headache, i understand why they're doing it. they've got to move somewhere off the bricks and mortar, but this isn't directly competition for amazon. >> they want it to be.

they think it is. >> they think it is, they're wrong. this is not an amazon competition. an e commerce competition? sure. >> stephanie link, not legit? amazon has no reason, the bald guy, jeff bezos, east -- >> hold on a second. >> step out of the way. >> no aren to be worried? >> i think you stick with the companies that have executed well in the strategy and amazon certainly has and i think ebay certainly has. we're not involved in either name. but i would say in retail in general, you know, both of these stocks have had a big, big move here to date. and they're trading pretty high multiples relative to historical averages. if you're looking at retail and an idea, dollar general is one i continue to like and continue to buy. it's not on the internet, but i do think the valuation and trade down still works and i think there's a place for the dollar store. >> walmart or amazon? you've got money to put to work. where are you putting it?

>> i bought amazon yesterday and today, and walmart has razor thin margins, but a.mazon has even thinner margins. now you have walmart, one of the largest retailers attacking the retail side of the business. i think for a very easy one-year trade, you buy walmart, sell amazon and sleep on it, a year from now, you're going to be doing very well. >> finish the conversation. >> well, i don't think the reach is broad enough. yo you're seeing it in virginia, philadelphia, minnesota. it costs $10. the economies of scale still favor the higher markets. and it boils down to the holidays. who will have a better holiday season? amazon trading lower today, 37% was the growth of september same-store sales. that's a little less than what they saw in august. >> walmart at a historic high. right where we are right now. >> i go walmart. >> all right. we want to know. which retailer will win your

wallet this holiday shopping season. tell us what you think at facebook.com/fastmoney. we'll post the results 5:00 p.m. tonight over at the nasdaq. first it was mapgate and now iphone scratches. it's been anything but easy going at apple lately. is tim cook losing the apple halo? let's welcome in the senior associate dean at yale school of management. professor, dean? welcome back. it's good to have you as always. >> thanks, i'll take all the above titles. >> all right. when you look at tim cook's performance. he was named ceo on august 24th of 2011, stock up 80% since then. mr. jobs passed away on october 5th, 2011, stock up 69% since then. are we way out of bounds even questioning whether tim cook's got the chops for the long-term for this gig? >> we are way out of bounds questioning him. tim cook has surprised many.

the biggest challenge is not his performance, not his delivery, not the future of apple, and certainly nothing with his style, which is admittedly quite different than steve jobs'. the challenge is, of course, managing expectations. i think he's doing a good job of that, as well. but there are just soaring expectations. if you take a look at the major pieces of his puzzle. his management retention has been superb. keeping, you know, marketing guy shiller, the developer of the ipad, john ives, he's keeping great talent in there. the hardware engineer, they announced was leaving in august, june, they needed him. and so they brought him back in august. just incredible stability in management. the product introductions, of course, which get a lot of the attention here have been remarkable turn arounds. you look at steve jobs, how defensive he was, not to mention

andy grove when the pentium when intel brought that out, diminishing the seriousness of the flaws in that chip or looking, even aol. very quick to respond. >> what about the management differences? right? there was this aura that steve jobs had, it's not arrogance, and apple sort of carried that along, and now you have a completely different management style. should apple be -- should tim cook be a little more in your face? they have these issues where tim cook comes out and he apologizes for things, he says i'm extremely sorry. steve jobs looked at situations like that and he got defensive. he was basically the hell with you. >> got defensive, people got angry and the stock would take momentary hits that would leave buying opportunities for the rest of us, but created hits. people made fun of him, consumer reports was trashing steve jobs as you remember over the antenna problems and the construction jobs was out there blaming all

the 1,000 people in the auditorium in the ballroom saying it was caused by their interference of their own wireless systems. he had everybody turn it off, the lights off in the theater have everybody look at everybody else and he couldn't get it to work. and it took him about 40 days to respond to an antenna problem blaming the users all the time, saying we have a problem with maps, we're going to fix it. that speaks for a lot. it's very impressive. the ceos of mattell and other great companies, we've seen them take responsibility when there's problems. that's encouraging. yo ur lo you're looking at -- people were complaining about that weekend they had 5 million sales of the iphone 5, well, you know, what an incredible performance that is. since that introduction, they've reached another 22 countries and about 30 countries now. soon will be 100 countries. so the fact they only had 5 million sales that weekend plus

some other pent up presales, that's remarkable performance. and we should celebrate that. that was a good problem to have. >> i've got to run, but sounds like you're giving tim cook an "a," maybe like extra credit or something. >> he gets an "a," "a" plus. he's brought in by contrast microsoft now wanting to age some of the brilliance of apple. and bringing in mark penn as a chief strategist certainly taking things up. >> jeff, good to have you as always. >> thanks. >> you want to just button that conversation up, joe? >> just to use a sports analogy for a second. will it be football, baseball, it's the players, it's the products that matter. think about tom coghlan.

he comes back. it's all about the products and i think with cook, it's going to come down to the capital allocation strategy. what's he do with that $100 billion -- >> maybe they split the stock. >> maybe they should. >> maybe everybody who owns apple. maybe everybody who wants it already owns it. as long as they have $100 billion in cash, that's the put to every institutional investor. >> and quite honestly, i don't care what they do with that money. i think they're doing fantastic. >> and they've got the money and can decide what to do with it. at the sector booming inin years, why that uh trade may be over. we debate where prices are going from here. and how to invest depending on who wins the election as the race for the white house heats up. we'll be right back. [ male announcer ] the 2013 smart comes with 8 airbags,

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[ male announcer ] the exceedingly nimble, ridiculously agile, tight turning, fun to drive 2013 smart. ♪ it's one of the biggest turn around stories of the year. we're talking nat gas which has jumped almost 25% in the last month alone. does the trade have legs? let's go to jackie deangeles.

jackie? >> good afternoon, scott. well, it's a live streaming show you're talking about dedicated to trading futures. more on that in a minute. but first, you said it, natural gas has been on a tare lately, but you know what hasn't? the natural gas stocks. names like chesapeake and apache have barely budged. what's behind it? let's start talking futures now. at the cme in chicago, the nymex in new york, anthony, let's go ahead and start with you. talk to me about nat gas. >> well, we've got a market right now flirting with unchanged, little bit up, little bit down this morning. but i did make a trip over to the options ring which is on my left here this morning. and these guys were telling me a lot of buying in the natural gas calls right now and a lot of selling in the puts. this is a completely long play right now and almost like they're treating it like texas hold 'em, and a lot of buying,

370, 380, 3.90. so these guys are poised for this thing to go higher. this is the smart money, the funds that are buying, and i'm not going to fight this trend. looks a little up right now, i don't like buying it right here. i'd like it to dip before i get long. >> anthony, listen, i want to add to that. jackie said at the beginning of the show, this is the nat gas play, not a nat gas stock play. take a look at the futures versus those stocks, you've got to play the futures on this particular play. we see there's a large open interest at the $3 level in the puts and a large open interest on the $4 calls. we may be in a bit of a range here, but i think there's a phenomenal play here. as we start to get a little bit colder, demand's probably going to start to tick in a little bit. we also know that volume's starting to pick up on the buy side, which you noted. and also, we had a giant build, 900 bcf at the beginning part of march and cut that down by 67% with the super hot weather this

year. now, listen, nat gas supplies are still at record levels. so you have a lot of conflicting signals here. so what i'm going to do is defer to the chart. i think that we're in the middle of this particular range. if we start breaking off these recent highs around 355, i think there you could see some legs. >> okay. we know why you like it. break down the trade for me exactly how you do it. >> well, listen, i'm buying november, and really i'm looking for a volume of big spiked plays, i'll buy it 356 on a stop. why? i'm looking for momentum and a potential breakup. when i do get into that trade on the long side, i'm going to put a stop at 336 of just below recent low. my target's going to be under the $4 level at $3.96, risking $2,000 to make $4,000. and if it closes before my entry point i'm going to scrub the trade. and by the way, we do have nat gas inventories tomorrow, i don't want to leave this trade dangling out there.

a today make-it-or-break-it. >> okay. fair enough. we like nat gas, that's how you're looking at it, rich. >> do we see $4? and if so, when? >> i do think we might see $4. and this is a total seasonal play i was talking about earlier, but i think we'll probably see it in the late january, early february, so right after the first of the year. >> all right. >> all right. now you guys know how our guys are making money in the commodity pit, what about you? do you think nat gas is headed higher? log on to futuresnow.cnbc.com, we'll reveal those results online, and also be sure to log on to futuresnow.cnbc.com tomorrow for our live streaming show. we're going to have an exclusive interview with always outspoken representative ron paul, a must see ahead of that vp debate on thursday night. >> thanks show much. we'll look forward to that.

our thanks. what's next on "halftime," how to position your portfolio depending on who wins the election. and jaded, why you may want to consider unloved stocks. those stories and much more when we come back. [ male announcer ] trading's like a high-speed train. and you don't want to miss it with thinkorswim by td ameritrade. you get knock-your-socks-off tools, simple one-click orders, real-time paper trading to hone your skills, plus anytime you need it support. ♪ stocks, options, futures, and forex.

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welcome backseat, as we make the turn on "halftime." chevron expecting the third quarter profits to fall substantially from the previous quarter blaming hurricane isaac's impact on production. steph, here's a look at the chart today, down 4%. >> yeah, we're normally longer term investors, right? but we trimmed this position last week and down 4% is an overreaction because i think a lot of expectations for

production for the third quarter were already low. a lot of it has to do with price realizations, but one-time events including hurricane isaac and the outage. the long-term story does not change for this company. they have a long-term program to grow mid-decade and the capital allocation story is also still very attractive. the company has raised the dividend in the last ten years and had one for the last 100 years. i looic the story on weakness for buying it. >> focus your attention to the costco, dollar tree. dollar tree up about 3.5% and costco getting a nice bump, as well, better than expected earnings, dollar tree rising on an upgrade to outperform over at wells. pretty good looking tough stuff. >> great looking stuff. you're talking about the discount space, absolutely. and you look at dollar tree, they're talking about the valuation, this is a stock that was $56. it's pulled back, i think they're looking at not just the valuations, looking at 16 forward p/e, but the solid comps, this is a name i think survives and continues to build upon what they did which was

steal a lot of business from walmart back in 2008 and 2009. both can survive just fine. >> all right, give me the lowdown. stocks down nearly 5%. obviously it's a tough day for the overall markets including the nasdaq which i'm looking right here is down, a bit shyer by .5%. >> could be a little bit of a spillover. it's more than a technical breakdown, one of the favorite names to own. i added here, i'm long, i added on the selloff. i like the cfo. told us he's buying the stock. i think much of the analyst expectations for lower earnings and revenue growth have been priced in to stephanie's point. we know the semis are bad. i think in the analog space, it's going to be the one winner. less than one month to go until election day and here at cnbc we created our own president obama and governor romney portfolios made up of stocks expected to gain if either candidate wins the

election. let's take a look at their portfolios right now. because -- and i'll go to you first, pete. since the debate, the so-called obama portfolio that, again, we chose here at cnbc and the stocks are alternative energy names, some hospital stocks and things that would potentially get a lift if mr. obama were reelected down 2.5%. governor romney's portfolio consists of what you may expect, some of the banks, some of the traditional energy names, drillers, oil exploration companies, that portfolio getting a lift of about 1.3%. so you have to position yourself here with, again, 3 1/2 weeks or so? >> sure. >> before the election? >> i look at this, the portfolio of what the reactions are. and i actually like the move already in the financials. i think the financials have that much more of a leg regardless of the candidate. however, you've got a nice little bit of a boost after last week and how well mr. romney did in those debates, but i think either way these stocks can go higher. i think across the entire spectrum of these names.

the financials, particularly the ones that are going to give you a healthier dividend have more upside. but i think either way, these names will continue to work for the upside. >> yeah, morgan stanley and citi are chosen as part of the portfolio. pick some names from the energy space? >> well, in the energy space it's all about the refiners, that's where most folks have been positioned. pete has been on that story, as well. a little bit of a reallocation, you look at exxon mobil which has proven oil reserves and has a touch of natural gas. i think under a romney administration, a big large cap oil name like exxon mobil will do well. however, i'm not entirely in love with energy here. and understand the congress that romney would be working with is not the congress that we had under president bush, which is a very pro-oil type of congress, right? >> stephanie link, take a position on hospital stock. one of the sectors that seems

most obvious to gain under president obama affordable care act, more people heading into hospitals, getting care and the hospitals being reimbursed for that coverage where they otherwise might not be, those are the stocks pulling back right now as mr. romney seems to be gaining a bit in the polls. >> yeah, so i think hospitals and hmos are kind of interesting. i think universal health is one name that kind of focus on sight. and i think they're going to win no matter what. that's a higher growth part of the business in this case. so that's one i'll focus on. should it pull back materially from here? i like their acquisition strategy and one name i like on the hmo is aetna. i like the acquisition announced with coventry and i think the balance sheets are strong and underappreciated. that's one on my radar screen to buy. >> and take a position on either side of the portfolio, energy names, traditional, if you will, phillip morris as part of the romney portfolio and not really mentioned as part of either,

obviously, the bank stocks or energy on the other side of the aisle. >> i like the long energy side of this. i think energy is one area where it's a significant amount of global growth slowing. valuations are quite cheap. chevron plays a great dividend. >> jamie dimon is speaking, the jpmorgan ceo speaking in washington before the council on foreign relations. i believe he's in washington. and he seems to be speaking on the fiscal cliff. let's listen in to the always colorful jamie dimon. >> -- this is bad and they start to make decisions the margin, don't higher, don't build, don't buy. let's wait and see. let's not do that with ourselves. >> it'll be a slope going into december 30th. yeah. after that, probably. >> unless we concoct an anonymous deal rather because congress finds a way to kick the

proverbial can down the road. how are you worried at some point if the united states can't do something on the order of simpson/bowles $4 trillion over a comprehensive deal. how worried are you that one day you wake up and suddenly your blackberry or iphone is red hot because the bond markets essentially move against the united states? >> it's virtually assured. it's assured, the question is when and how. and so, you know, i can't honestly tell you. i know it's going to be two years or five years. it will happen. it is a matter of time. the united states can't borrow indefinitely, and you've seen it, you don't believe me, look at -- over the 100 years, bankruptcy's a country after country after country who just thought they could get away. so why would you take the choice of wait and see. so we are going to have fiscal discipline. it is imposed upon us or we do the right thing, do it to ourselves the right way. and the way, in fact, enhance

growth and jobs. we did something like a simpson/bowles, i believe if they had been done a year ago, this economy would have been booming, booming. and not just -- we're just showing we have the ability. i would say america knows the way. we don't have the will. europe has the will, doesn't know the way. more efficient tax system, it would have created much more certainty among a whole bunch of policy things. i think we would have been booming. i think it's doable, we need the leaders to say we are going to do it. >> when you think of the outlines of something on the lines, you say it has to include entitlement reform, something with tax increases. >> yeah, i think most business people are not partisan and not parochial. we can't spend -- we could all sit here and decide, we spend 20% of the government, i think simpson/bowles is 21% and obviously taxes, an efficient

tax system. it's a far more efficient tax system. so it gets the huge waste in churn, i call fixing costs in our society from a bad tax system, a polluted legal system, uncertainty around things. so, yeah, i think you would have had better growth. and i think it was 4 for 1 or whatever it was. but close enough would have been good enough. doesn't have to be exactly right. if it gets growth going again, remember, growth will pay for a lot once we have growth starting again. >> let's talk about growth. the united states is -- has been now for several years growing at roughly half, what you might call the modern historic rate of economic growth. instead of growing in the mid threes, growing in fiscal '02, giver or take. if you were in a position to more broadly make the case publicly. here are the things we ought to do in order to generate double the rate of economic growth at 3.5%. one would be a comprehensive budget deal like you just

mentioned. what else would be on jamie dimon's list? >> let me give you the big picture about america, this great country of ours, okay. the president recognizes one thing for certain, they go in with a royal straight flush. i think the attitude how terrible that america's lost, it's not true, folks. we have the best military on the planet, we will for years, we have the widest, most transparent markets, in all this glory. as management investment, equity, the actual markets, the municipal bond markets, among the best businesses on the planet small, medium, and large. one of the most innovative entrepreneurial country around. i'm talking all up and down the factory line, steve jobs, you name it. we invest more in capital equipment. we have a good rule of law, it's no longer the best because i think we have a slightly polluted court system at this point. we still have the product and

work ethic is still there. okay. this is still the time to invest. if you invest in one place, it would be here. we've got to get beyond that. now, we don't have divine right to success. we have to get immigration right, fiscal policy. we were given another gift called shale oil. the mo-- i know you wasted all that energy, let's give you one more shot. let's hope you do this one right. we have a problem. we should diagnose the problem. and, you know, if you look at america today, the corporation is in great shape. markets in good shape, consumer's not in bad shape and housing is turning. why are we going to 2%? and this one i can't prove. and -- but i believe it's okay, but there's that huge wet blanket out here and the wet blanket to me is, only the

uncertainty around -- or you could say real uncertainty around taxes, policies, fiscal cliff. we had the debt ceiling fiasco, this constant anti-business, not just sentiment, but regulatory, a.g.s, i tell all around america, wherever i go i ask business people, ho dough you -- they all say it's terrible. so it's not just banks. we've done it to ourselves, folks. we're shooting ourselves in the foot and doing it every day. get rid of that wet blanket and this thing will take off. and there was a great article written, someone reprinted in the "wall street journal" and i remember george schultz, gave president-elect ronald reagan some advice. it was consistent taxes, consistent regulatory, tell the same positive story over and over and over, and it will turn. and you've got to believe in it. so, you know, america usually will do the right thing after it's exhausted all the possibilities, i hope we do.

the important part to me also is in washington, okay. if you think the washington and business can go to war with each other is going to be good, terrible error. collaborations which should've happened. every business i know wanted to help get things done, you know, and would've pulled together, worked around the clock. but it became a war. and now we're relit indicating parts of those wars. dodd/frank and health care. so we're going to relitigate it. it's another addition to the wet blanket and the benefit is get it right, get it right the first time and move on. but we didn't. >> let's transition to that. to the extent there has been a market absence in collaboration or significant friction between the worlds of politics and the worlds of business, you would put the lion share of the responsibility on the political side? >> i would put more in the political side than the business side. the brt, the business ceos, everyone i know is coming down saying what can we do to help? there were council, meeting, the brt wanted for the first time

would surprise me when someone would ask a question, 120 ceos. do you want universal health care for american citizens. 80% said yes. they wanted it done right, a certain way, the way it was done. but, yeah, there was a huge -- let's pull together as americans and make this work whatever it took. and it didn't happen. i don't know, you know politics far better than i do. but that didn't happen. it still can happen, by the way, my attitude is, let's do it again. let's try again. we owe it to ourselves to do the best we can. >> one area that you clearly know better than i do is regulation and regulatory policy. so let me put that out there. you know, historically, one often talks of pendulum swings and i think there's something of conventional wiz that pre2008 the pendulum swung too far in the direction of underregulation and the dangers obviously after twaig, at least one school of thought is it's gone too far.

another school of thought i'll come to in a second. where do you come out on that? >> i meet a lot of people with knowledge and justify it with whatever they thought. regulation is a good thing. good doesn't mean necessarily more or less. just means good. highways post 65 miles an hour. you can't drink when you drive. those are good things done properly. in some of these areas we created such confusion, who knows who's responsible for what. overlapping jurisdictions, no way to adjudicate disputes. you make mistakes, you're attacked by 17 different agenci agencies, in the old days it would be the one who is responsible for it. we need good policy, clarity, simplicity. people on the financial side say more, they mean more capital. fine, what's the level of capital that makes sense. let's have a debate an look at

the facts. i've always supported a lot of capital, a lot of liquidity. i think at one point it is going to go too far. a lot of these laws are written in basel. they're not written for america. they're written for other people for other purposes. regulators say we have to have a common -- do it right and make it fair for everybody. i agree with that concept -- except it was bad for america. because if america doesn't want to do it, the rest of the world can't make us. when you look at some these rules, you say those don't make sense for this country. >> what about the poster -- >> we told you he was colorful and he did not disappoint. jpmorgan's ceo jamie dimon down in washington at the council on foreign relations taking a number of questions addressing a number of topics today, including the economy, china, the fiscal cliff of course on the u.s. he says the united states is fundamentally stronger than people think. says china will meet its objectives of 7% to 8% growth on the fiscal cliff, mr. dimon

saying the economy would have been stronger had we adopted simpson-bowles. again jamie dimon down at the council on foreign relations. much more when we come back. the markets selling off today. the s&p 500 almost at session lows, down .5%. dow industrials giving back .66% as well. back on the other side of this break.

it is time for the biggest

pops and drops in midday trading. sprint is up first. >> speculation that they may go after a pcs after all. the saga still continues. i still avoid the stock buying under $5. >> the monster of a man. >> monster beverage. when you go back you can see where it is coming from. there are some regulations about the health issues and the rest. downgrade dad but the target remains 78. i think this is an interesting name at these levels. >> true religion. >> they put themselves up for sale potentially hiring advisors. i actually like the franchise. i think the valuation is good. this is a good buy. >> give me a drop on valero? >> the market's derisking. july 22nd valero unit louisiana goes down, back online now. 135,000 barrels per day. you've got a market right now where the gulf gasoline and the cash is weak. >> coming up in the next hour "power," we continue to discuss those fiery comments from

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final trades. >> i pick short amazon. all the sharks in the pool going after their launch. great company, not a great stock. >> buying the china atf, like the stimulus programs they announced this week. >> i just want to -- the will, having the will, we've got the way. excellent comments on the goldman sachs 12:50 call with the fiscal cliff. if we don't have the will, we're going to see that jpmorgan. >> i think had he us all captivated for a few minutes. outstanding job speaking once again. wells fargo sticking with the financials. 2.5% dividend yield. this is a name, they're getting sued by the government and the stock is still flat to up. that's impressive. >> we'll have more "fast money" tonight at 5:00. follow me on twitter